That's a complicated question without a clear answer. I didn't consult a tax professional, but in reading around on the web, the most common consensus appears to be that no one really knows for sure.

In this specific example it's not declarable income, no—at least, not for me. But if this was a personally-owned device and I was actually mining for myself? Dunno. I would guess that the safe thing to do, at least in the USA, would be to report it to the IRS as self-employed income and withhold accordingly. But definitely don't take my advice as gospel.

The broken fan doesn't seem exactly hard to fix yourself, but I gather that would be rather useless unless you're actually there to unplug it when it happens (I assume the plastic bit broken off stopped the fan).

In a year, it will consume almost $100 worth of juice—and that's on top of the $274 it costs to buy the box in the first place. [...] The short answer: every day, that machine magically generates something like $20 in bitcoins.

That's really remarkable. Not only could you recoup your investment in ten days, If that exchange rate held up for a year, that would be a 1851% return on investment.

Of course, as the mining power continues to increase, that level of return on investment will not hold up. But still, it must be pretty amazing right now for the people that own these high-performance miners.

The broken fan doesn't seem exactly hard to fix yourself, but I gather that would be rather useless unless you're actually there to unplug it when it happens (I assume the plastic bit broken off stopped the fan).

No, definitely not hard to fix myself. However, when review hardware breaks, you have to answer some additional questions—how will the company react to broken hardware, and more importantly, if they send a replacement, will the same thing happen again?

Rather than just popping in a new fan, I wanted give Butterfly Labs the opportunity to respond, and I wanted to run the new miner for about as long as the original one to see if the problem showed up again.

The broken fan doesn't seem exactly hard to fix yourself, but I gather that would be rather useless unless you're actually there to unplug it when it happens (I assume the plastic bit broken off stopped the fan).

No, definitely not hard to fix myself. However, when review hardware breaks, you have to answer some additional questions—how will the company react to broken hardware, and more importantly, if they send a replacement, will the same thing happen again?

Rather than just popping in a new fan, I wanted give Butterfly Labs the opportunity to respond, and I wanted to run the new miner for about as long as the original one to see if the problem showed up again.

Of course, what I meant was, if you hadn't actually been there to unplug it when it happened, I assume the chip would have fried itself. As in, the problem is larger than "easy to fix problem", it would have actually selfdestructed beyond your ability to repair. (edit: well, I suppose they have build in thermal sensor to make it autoshutdown at X temp.?) (edit2: well I guess, as long as the heatsink is attached, the heatincrease will happen slowly enough that the application would crash, thus making the chip idle.)

Under the assumption that Butterfly labs were aware that you were a journalist, and not a customer, then their warranty support is hard to judge from that incident. Actually my guess is that the version you had first was the "journalist version", seeing as that one did hit the 5ghz mark (but missed every single other spec., size, powerrequirement, powered by USB etc.).

Gotta say, Lee followed proper scientific principle, obtain a 2nd run and repeat the test, much fairer and honest than bodging a repair - that gets you into the realms of super/stupid cooling and overclocking and...well that's not this is really about.

Of course, what I meant was, if you hadn't actually been there to unplug it when it happened, I assume the chip would have fried itself. As in, the problem is larger than "easy to fix problem", it would have actually selfdestructed beyond your ability to repair. (edit: well, I suppose they have build in thermal sensor to make it autoshutdown at X temp.?)

Under the assumption that Butterfly labs were aware that you were a journalist, and not a customer, then their warranty support is hard to judge from that incident. Actually my guess is that the version you had first was the "journalist version", seeing as that one did hit the 5ghz mark (but missed every single other spec., size, powerrequirement, powered by USB etc.).

Hopefully the miner would have throttled and shut down. They are supposed to throttle under excessive heat; I'm assuming this extends to the ability to shut off if necessary. I didn't want to test that on my own, though.

From what I'm reading, all the ones they're shipping are hitting their marks. The interesting factor is the variations—the first & second miners churned out pretty much identical hash rates, but varied pretty wildly in how much power they consumed and how much heat they put out. I'd say it's an indicator that they really are shipping as many of the things as possible, since even the nosy journalist got a loud one. But, you're exactly right in that the specs of the shipping Jalapeño are pretty different from the original design goals.

Power goes in, money comes out - can't explain that! Or there are articles explaining it, but I barely understand a damn thing

Very tempted to buy one of the small devices now, especially thanks to Lee beta-testing MacMiner for us. I don't think I could stand my Mac mini plodding along with 3.1MH/s of CPU/GPU-mining for long, as it's both noisy and inefficient. The BFL devices are priced a little more than an impulse purchase for me, especially with shipping, but if I get it back within the month it's hard to resist. There are less useful things I could waste that money on!

But what happens when these devices are no longer useful for their intended purpose? Can they be traded with some value somewhere, or can they be repurposed? For example for password cracking?

These boxes calculate SHA256 hashes, so with new firmware and applications, they could be changed over to crack passwords, it's not so simple right now though. I would caution anyone against putting any significant money down to buy any miner that isn't deliverable immediately, unless it has a small deposit. Bitcoins could lose 90% of their value in a month, difficulty will probably increase by an order of magnitude in 6 months, and there is no good way to predict either. And you could have your money sitting in someone else's bank account while all this happens. The better thing to do is try and buy something with Bitcoins, that is how this currency will grow.

So, after bitcoins, what useful things can I do with an obsolete miner?

Not much really, at least not in an easily conceivable way. ASIC does stand for Application Specific Integrated Circuit, with the emphasis on the first two words. In this case that application is specifically "SHA256(SHA256(x))" (not MD5 or even just SHA256(x) ) within specific parameters. I don't even think it could be particularly useful for password cracking since the mining network has been described as "cryptographically incompatible" with SHA256 password cracking.

I think part of that has to due with the use of a salt for most password hashes which makes it incompatible with the mining. The other reasons are that the hash+salt would have to be 80 bytes and would have to start with 4 zero bytes - basically a pathologically small subset of password hashes to be useful. How big of a deal those items are though is heavily dependent on whether they are optimized for in the design of the chip.

The rest of it is that to maximize efficiency and minimize cost it pretty much does double SHA256 and nothing else - as opposed to a flexible system like an FPGA (field programmable gate array). To make it even more difficult to conceivably use it for another application, the firmware is locked - though this would be more of a significant delaying factor if someone did manage to come up with a reasonable way to use it for another purpose that was worth the effort.

I guess though that anyone who was using double SHA256 hashing for passwords for whatever reason would probably not want to do that. Though why they would do that in the first place might be the better question.

The problem with overclocking is that if you have to increase voltage, you get a non-linear increase in power draw, i.e. the power efficiency is guaranteed to go down, which is the primary factor here. On the other hand, you have to fit the "profit" curve to the incredibly rapid depreciation of the miner's value as a miner, so there is that, too.

By saying n00b, instead of "noob", I'm less likely to sound like a trendy/annoying dork that must resort 1337 speak. I haev installed a webserver running linux, therefore I can totally relate to a fetus. In exchange for a future NSA gangbanging and my botcoins, I have gained $700. It's t3h future of bitcoins, a currency for fiat currency. sUp3r k0mPuTi/\/g

1. What was the bandwidth consumption like on your 'net connection?2. What was the hard disk usage like on the computer controlling the miner?

I ask question 2 in particular because when I dabbled with mining ages ago using my graphics card (before giving it up), a fair amount of hard disk space was used up (I think) for transactions. It wouldn't normally be a problem but that machine I used had a small flash drive so one tends to notice more when a few gigs of free space are lost.

Interesting report, but for anybody with get-rich-quick dreams, keep in mind that they're only now shipping units that were ordered last September, and there's no indication that the lead-time is shrinking. So unless you're confident about what bitcoins will be worth in 9-12 months...

1. What was the bandwidth consumption like on your 'net connection?2. What was the hard disk usage like on the computer controlling the miner?

1. Not enough for me to have noticed. It wasn't even something I bothered to look at. Low enough that it had zero impact on me, and since I work from home I'm pretty sensitive to bandwidth issues.

2. Not enough for me to have noticed. MacMiner takes up probably ~60MB, but mining didn't consume any noticeable amount of space.

Considering the poster was using an SSD on their mining system, #2 sounds like it could be a pretty big plus for them. I mean most consumers wouldn't run into the limits of their SSD in terms of maximum read/write cycles, but if their mining application was runing 24/7 AND was using a significant amount of their drive space it could end up being pretty inconvenient.

How do these ASIC-based miners compare to, say, stuffing a cheap case full of a couple of relatively cheap graphics cards?

There's no way I'd go near a BFL device, simply because there's absolutely no way to predict when they're likely to ship new devices, but if I could use off-the-shelf parts to cobble something comparable together for around the same price...

Basically the Bitcoin is going to lose major value and the mining rate is going to drastically decrease very, very soon, and waiting even a few months would likely make it a waste of money to buy something from BFL.

Since it requires a computer to mine, you have to account for that machine's power usage also. That will easily exceed the 50 watts for the miner itself. I'm thinking somewhere in the range of 300w additional for a desktop machine, or 100 watts or so for a lower power laptop.

Since it requires a computer to mine, you have to account for that machine's power usage also. That will easily exceed the 50 watts for the miner itself. I'm thinking somewhere in the range of 300w additional for a desktop machine, or 100 watts or so for a lower power laptop.

That's a good point - the consideration you might be hooking these violently loud space-heaters up to your PC. The power consumption might be an issue if you didn't normally have a PC running 24/7 anyways, but I imagine many people do. Though people have been hooking these up to a Raspberry Pi for a total consumption of about ~36 watts (for one miner+Pi). That also lets you not turn your home-office or living-room into a noisy sauna; I would see that as the bigger benefit as I do keep mine running 24/7 anyways.

it's not even close ~ a computer is required either way btw, you must attach the BFL device to a PC/Laptop. That said, a Radeon 7970 will hit ~ 650 MH for ~399$. That's about 7x slower, and it will consume ~350 watts . If you went batshit crazy and put a system together with 4 of them, that's still only ~ 2.6 GH, and you'd need a 1200 watt PSU and an air conditioner just for that rig.

If you want in right now, you can buy those USB Sticks, Eruptor Sapphire, they hti 336 MH, and use a cool 2.5 watts of power, they arnt cheap though at ~150-200$ each. And 336 MH is nothing special, a Radon 7850 will pull those numbers for ~170$, though at a huge power difference, and thus less profit.

However, I think 150$ is too much to spend for 336MH at this point, it will take 8 mos to break even. You can put 10 of them or more in a USB HUB, and rack up the GH, but they are just too expensive at this point. They are availible NOW though.. 10 of them will net you ~3.3 GH, still slower then the Jalapeno, and at 3x the cost.

GPU/CPU mining is dead, and FPGA is on it's way out. It's ASIC or nothing now. And that situation is only going to get more extreme, very shortly. If you want to GPU mine, consider LiteCoin.

Since it requires a computer to mine, you have to account for that machine's power usage also. That will easily exceed the 50 watts for the miner itself. I'm thinking somewhere in the range of 300w additional for a desktop machine, or 100 watts or so for a lower power laptop.

That seems...really high. In any case, if you're like me, you've already got a number of computers running 24/7 anyway. If you plug the miner into one that's already running, it won't use appreciably more power. The only reason I didn't keep the miner on my main desktop is because it was too loud, so I instead stashed it in my dining room hooked up to my MBA. If I actually owned the box and was going to keep it and run it permanently, I would have shoved it into the server closet and hung it off of one of the always-on boxes in there.